The tug of war between bulls and bears continued on Thursday with the bears winning out. The rising tide of fear that is driven by inflation and the FOMC?s rapidly accelerating timeline for interest rate hikes has the market on edge. While rising interest rates are a sign of economic expansion and it is very, very early in the rate hiking cycle, there are those who think the FOMC is behind the curve and will raise rates and a much faster pace than seen before.

The latest look at the CME FedWatch Tool shows the market is pricing in at least a 50% chance for 4 interest rate hikes by the end of the year. Based on this week?s CPI and PPI data, we think the first hike will be at least 50 basis points or worth half of the 4 hike outlook. As for the S&P 500, it looks like the market could head lower but earnings season begins today and that could change the entire mood on Wall Street.